5 Tax Tips for Expatriates departing Australia

You’ve packed your bags and you’re about to embark on your long-awaited expatriate journey.

Although you’re heading for a far-away country, Australia won’t ever be too far from your mind. At least, not until you’ve sorted out your Australian taxes!

To help you cross-out Australian tax from your to-do list, we’ve listed our top 5 tax tips for expatriates when planning their departure from Australia.  

1.     Private health insurance  

This can save you thousands as soon as you step on the plane. Make sure you reassess your private health insurance needs when leaving Australia. 

While you are living overseas, you will no longer be liable to pay extra tax (between 1% to 1.5% of your taxable income) if you don’t have the designated type of Australian insurance. It may be appropriate to reassess your insurance needs, coverage, and costs now that you will be living in another country.

2.     Plan ahead (or behind) for Australia’s exit tax

When you leave Australia, you may need to pay an exit tax. Unless that is, you are eligible to choose not to.

Importantly, the choice you make regarding Australia’s exit tax does not have to be made by the exact date you leave, giving you the benefit of hindsight. If you are eligible to make a choice, you have the chance to save tax on your departure and potentially save tax in the future when you recommence your Australian residency.

3.Review the ownership structure of your assets

When departing Australia you may think you’re leaving your Australian structures behind, to patiently wait until your return. But in fact, your Australian companies, trusts, partnerships, and superfunds can also be significantly affected by your departure.

Reviewing the ownership structure of your assets when planning your expatriate journey can help you avoid a hefty tax bill on your Australian exit.

4. Say goodbye to the tax-free threshold

After you’ve left Australia, you must still pay tax on the income from any Australian rental properties, with one significant difference. While you’re living overseas, you will not be entitled to Australia’s low-income tax-free threshold. Instead, you will be paying tax from the very first dollar of net rental income earned.

Tax planning prior to your Australian departure can assist in minimising the impact of the removal of your tax-free threshold.

5.Be aware of your outstanding Australian taxes

Although you may have left Australian shores for an extended time, you will remain subject to tax on any income that has an Australian source. This can be extended to your income entitlements that were accrued at the time of your departure, but only paid after you had already left. Examples can include employment bonuses and employee share scheme income that relates to an earlier tax period.

 Make sure you are aware of your trailing Australian tax obligations and budget for any outstanding Australian taxes.

If you’d like some assistance with your taxation, reach out to Dean Crossingham,

Head of Accounting at Stanford Brown.

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